U.K. RICS Index of House Prices Remained Negative in May

Demand for homes was boosted earlier this year as first-time buyers took advantage of a tax exemption on purchases of homes costing less than 250,000 pounds before it ended March 24. Photographer: Paul Thomas/Bloomberg

June 12 (Bloomberg) -- A U.K. house-price index stayed
negative in May as the crisis in Europe and the end of a tax
exemption for first-time buyers limited demand, the Royal
Institution of Chartered Surveyors said.

The gauge rose to minus 16 from minus 19 in April, which
was a six-month low, London-based RICS said today, citing a
monthly poll of property surveyors. A reading below zero means
more surveyors saw price drops than gains last month. A measure
of demand fell to a four-month low.

The U.K. economy has slipped back into a recession as the
debt crisis worsens in Europe, where Spain was forced to seek
aid for its banking system. The Bank of England held its bond-purchase plan at 325 billion pounds ($505 billion) last week and
its key interest rate at a record low of 0.5 percent as policy
makers assess inflation risks in the economy.

“Ongoing economic instability in the U.K. and overseas has
continued to undermine consumer confidence,” Peter Bolton King,
a spokesman for RICS, said in the statement.

A measure of new buyer inquiries dropped to minus 1 from 5,
the lowest since January, and a gauge of sales expectations fell
to 9 from 14, the report said. Over the past three months, the
price indexes for 11 of 12 regions tracked by RICS showed
declines, with Northern Ireland showing the lowest measure, at
minus 54. The exception was London, where the gauge was plus 44.

Tax Boost

Demand for homes was boosted earlier this year as first-time buyers took advantage of a tax exemption on purchases of
homes costing less than 250,000 pounds before it ended March 24.
The expiry has created “a clear loss of momentum” in the
property market, RICS said.

Other property-price measures have shown improvement in the
past month. Nationwide Building Society said values rose 0.3
percent in May, while property researcher Hometrack said prices
increased 0.2 percent. Lloyds Banking Group Plc’s Halifax
division said prices rose 0.5 percent, though the market may
stagnate in the second half due to the “ongoing tough economic
environment.”

In a separate report, KPMG LLP and the Recruitment and
Employment Confederation said their index of hiring of full-time
staff dropped to a five-month low of 51 in May from 51.9 in
April. An index of hiring of temporary workers slipped to 47.5,
the lowest since July 2009, from 48.2. Readings below 50
indicate contraction.